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The Real Power Behind The Midlands Engine

 

Battery technology is about to electrify the Midlands property market.

New battery technology is creating a high-voltage property business as dozens of battery storage operators compete to buy as many as 600 Midlands sites, Bisnow can reveal. With sites ideally between 2 to 4 acres, this could impact on the supply of industrial land as rival suppliers jockey for sites in a crucial 18 to 24 months window of opportunity.

Technology battery energy recycling

The government’s announcement on 29 November that the West Midlands is to play host to an £80M automotive battery research centre is another sign that battery technology is lighting up the region’s property sector and could mean a massive boost to the growing electric vehicle business, which the Midlands will pioneer.

And developers including IM Properties and Prologis are experimenting with Elon Musk's Tesla battery packs at Midlands industrial developments, a trend many expect to grow as electricity-cost-neutral buildings and energy resilience rise higher up occupiers’ agendas.

Here’s how battery power could transform the region’s commercial real estate.

The battle for battery storage sites

4 MWh Turner Energy Storage Project in Pullman, WA
Battery storage facility at Pullman, West Virginia

The Midlands is the focus for a national battle for battery storage sites, with as many as 600 sites in the region thought to be sought.

Typically looking for open sites of 2 to 4 acres, but also prepared to look at existing industrial buildings, these sites use improved battery technology to smooth out the peaks and troughs in electricity supply and demand.

By buying electricity in low-priced periods and reselling it when demand is high, operators turn a profit, and provide a carbon-neutral replacement for gas-fired power stations — the old technology that was previously used to smooth out supply in the national grid.

It is a fast-growing global sector predicted to reach revenue of $400B by 2030.

This growth is being particularly felt in the Midlands, according to Lambert Smith Hampton director Mark Walters, who said there is an 18 to 24 month window of opportunity as providers scramble to secure the sites with the best electricity connectivity and planning potential.

Walters and his team was appointed in July to advise BSR Energy as the company ramps up its efforts to meet the demands for energy storage. The initial task was to find 100 sites across the U.K. This has now multiplied to 600 requirements and rising, Walters said. Around 200 of these are in the Midlands.

“The Midlands is turning into a fairly significant market,” Walters said. There are probably "two or three times" more active requirements in the Midlands than LSH are handling elsewhere, he said.

Sites range from a minimum of 13K SF for a 5 MW battery storage park within one mile of an appropriate substation. The ideal battery storage park is 30 MW on a 2- to 4-acre site.

“The battery technology is now maturing, and has moved beyond the early stages, and it’s a real opportunity to utilise land that might not otherwise have much development value," Walters said. "Slowly the property business is waking up to the potential to capitalise on this convergence of technology and opportunity in the next 18-24 months. There’s a chance in this period to get the sites, to make the electricity connections, and to get planning consent.”

The hunt for sites is on — but there are obstacles. The cost of making connections to the grid can be considerable, particularly if several substations are involved. Stories of seven- and eight-figure costs are real albeit rare.

Stafford-based A Circuit is among those active in the Midlands market, seeking to secure sites of 2 acres or buildings of around 10K SF capable of housing battery storage facilities, or open sites, for 10 MW installations.

A Circuit offers landlords substantial option premiums to cover the period required to secure grid connection and planning consent, followed by a 25-year index-linked income stream. This kind of arrangement is not untypical.

Starting rents are up to £50K per year for a 5-acre site supporting 20 MW to 49 MW, depending on the cost and speed of grid connection available to each site.

Sounds appealing, but there are problems, said A Circuit technical director Dave Pallas.

“There are many problems that can still cause this growing industry to falter or even fail. The search for sites is always dependant on finding connectivity to the grid, to allow the battery storage system to be developed and connected.

"We and other companies are trying to find this electrical connectivity, and it’s like finding a needle in haystack. The National Grid is already under so much strain and is basically over loaded, so much so that we cannot get connectivity to that system to help relieve the pressure on that same system."

The Electric Auto Sector

Land Rover electric vehicle
Land Rover MENA

Has the government just paved the way for a  Jaguar Land Rover electric car plant? The announcement by Business and Energy Secretary Greg Clark said only that Coventry and Warwickshire will be the home of the new National Battery Manufacturing Development Facility. It is expected to mean a major boost to the region’s auto sector.

The facility, with £80M of funding from the government’s flagship £246M investment in battery technology — the Faraday Battery Challenge — will be the U.K.’s first-ever battery development facility and will help establish the U.K. as one of the world leader’s in battery technology and innovation.

A key part of the government’s Automotive Sector Deal, the new centre will build on the West Midlands exceptional reputation for automotive expertise and research and development — and is expected to provide the focus for a new Jaguar Land Rover manufacturing plant. In September JLR announced that they would only manufacture electric or hybrid cars by 2020.

JLR promise a portfolio of electrified products across the model range, embracing fully electric, plug-in hybrid and mild hybrid vehicles. JLR’s first fully electric performance SUV, the Jaguar I-PACE, goes on sale next year. Substantial plans for new JLR developments around Coventry have already been revealed, including the 62-acre Whitley site and half the 60-acre Gateway North.

The whereabouts of the factory had not been disclosed, which is why the location of the new battery technology centre is being interepretted as a hint that JLR will be the beneficiary. The government confirm that the new centre will be an independent facility openly accessible to U.K.-based companies wishing to develop battery technologies.

Battery Packs In Warehouse Developments

Hub69 at The Hub, Birmingham, developed by IM Properties
Hub69, Birmingham

Warehouse developers in the Midlands are adding battery packs to their latest schemes, and it could become a standard part of the fit-out requirement for energy conscious and forward-looking occupiers.

So far two developers have pioneered Tesla battery packs as part of electricity cost-neutral schemes.

IM Properties has introduced a Tesla back to their 69K SF Hub 69 development at Whitton, Birmingham. IM Properties said the building has a 250 kW solar array paired with a 100 kW/170 kWh Tesla battery. Using the battery to store electricity and resell it means electricity is cost neutral with a potential additional net annual revenue of £4,273 to the tenant. Retailer Argos signed up as Hub69 occupier in July.